Opinion: Expat tax and its impact on market economy

ONE of the most challenging issues facing the Saudi society today is the presence of a large number of expatriate workers who came to the Kingdom following the economic boom in the 1970s. Expats have become part and parcel of the Saudi society as they work in Saudi offices, firms, and homes and clean the Kingdom’s cities and streets as well as all public facilities such as hospitals, schools, universities and government departments.

However, the new expat dependent tax has created some kind of uneasiness and uncertainty in expat circles and this will have a negative impact on their productivity and the national economy. Many expats have sent their families back home leaving to falling house rents and closure of grocery stores. The new tax would force much more expat families to leave the Kingdom. It will affect the market as the expat community represents a substantial purchasing power.

I don’t think we have conducted any study about the negative effects of expat tax on the society and the economy and how to avoid its humanitarian damages. Small and medium enterprises (SMEs) will be the main victim of regulations imposed by the government to control expats including fees for work permit, social insurance, health insurance, iqama, exit and re-entry visa and subscription to Muqeem and Saudi Post, house rent and the expat dependent tax, which is the latest addition.